Start an Informal Referral Program

By Lise Stransky.

Informal referral relationships are a strong source for ongoing business, but small career services typically run into certain challenges. When I first launched Careers That Work For You, I partnered with almost anyone who approached me. Now, I am very cautious about working with friends and family, because the last thing I want to do is destroy a solid, pre-existing relationship. This is one of the reasons my husband and I have a no career coaching rule in our marriage! I’m too close to him to be objective.

Fellow CPC mastermind, Adrienne Tom, who is one of my good friends, mentors, and colleagues, and the owner of Career Impressions, approached me to join her referral network. Her ask was very simple – she wanted to add me to her referral relationship group, a group of industry contacts to whom she can refer clients. When she has clients approach her asking for services that she doesn’t offer, or is unable to accommodate, she can provide them with a trusted referral from this group. In return, they provide compensation in the form of a referral fee for any business generated from the lead.

I realized I needed to create my own referral relationship group. Using Adrienne’s model, I am slowly building my own group of trusted colleagues. This is how it works:

• If a client requests services that I cannot provide, or we are not a good fit, I simply give them some recommendations. I then write my referrals to give them a quick heads up (i.e., “I provided your name to a potential client named Joe Smith today.”) but I don’t collect or distribute client details or run them by anyone in advance. I leave it up to the client and referral professional to connect on their own and decide whether to work together. There is absolutely no pressure to take on any client.

• If services are agreed upon, I ask the professional to confirm service/cost agreement and date of service commencement. Within my referral network, everyone pays me differently (some at time of fee collection, some when services are finalized, and some at month end). And of course, this is a reciprocal agreement, so that if one of my colleagues refers someone my way, I provide them with a referral fee. We decide what is fair in terms of a referral fee; 15% seems to be a reasonable starting point. Our fees do not need to be set at the same rate.

The benefits of this type of relationship are:

• No paperwork.
• A group of solid trusted professionals to refer clients.
• Supporting my colleagues with referrals and business they might not have had.

The only two drawbacks I can think of are:

• If you have not sourced a solid referral, you could do damage to your reputation and brand.
• There is the chance that you might not receive the referral compensation, because you have not formalized or signed anything.

What are your thoughts on referral agreements among career professionals? Do you have them?